THE MAIN INDEX sank to the 6,300 level on Monday as a spate of strong US labor data fanned renewed inflation concerns in the world’s largest economy, causing markets to rethink their Federal Reserve rate cut expectations.
The benchmark Philippine Stock Exchange index (PSEi) slumped by 2.35% or 153.22 points to close at 6,343.10 on Monday, while the broader all shares index dropped by 1.33% or 49.94 points to end at 3,704.91.
This was the PSEi’s lowest close in over six months or since it ended at 6,313.11 on June 26, 2024.
“The local market plunged as it took into consideration the rising inflation expectations in the US together with the possibility of the Federal Reserve slowing down their policy easing,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “This comes following the US’ strong December 2024 labor market data.”
“Philippines share slid below the 6,400 level as sentiment was pulled down from the Friday night performance of the US, which saw its economy’s latest employment figures crush estimates,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said in a Viber message.
US stocks sold off on Friday, with the S&P 500 erasing its 2025 gains, after an upbeat jobs report stoked fresh inflation fears, reinforcing bets that the Federal Reserve will be cautious in cutting interest rates this year, Reuters reported.
The Dow Jones Industrial Average fell 696.75 points or 1.63% to 41,938.45; the S&P 500 lost 91.21 points or 1.54% to 5,827.04; and the Nasdaq Composite lost 317.25 points or 1.63% to 19,161.63.
A Labor Department report showed job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1% as the labor market ended the year on a strong note.
A hotter-than-expected job gain could translate into faster economic expansion, leading to a rise in prices. To contain still-elevated inflation, the Fed could be forced to take a more conservative stance on rate cuts this year.
“The peso’s decline against the dollar also added to the pessimism,” Mr. Tantiangco said. On Monday, the peso sank to an over three-week low of P58.70 as the dollar surged due to fading Fed cut hopes.
All sectoral indices ended in the red on Monday. Holding firms plummeted by 3.46% or 192.17 points to 5,347.85; property retreated by 1.78% or 42.04 points to 2,308.20; services sank by 1.53% or 32.58 points to 2,084.45; financials went down by 1.46% or 32.22 points to 2,170.85; industrials dropped by 1.37% or 126.91 points to 9,090.62; and mining and oil declined by 0.30% or 23.55 points to 7,736.26.
Value turnover rose to P4.96 billion on Monday with 806.77 million shares traded from the P3.77 billion with 1.04 billion issues changing hands on Friday.
Decliners overwhelmed advancers, 123 versus 68, while 51 names were unchanged.
Net foreign selling rose to P696.26 million on Monday from P45.93 million on Friday. — R.M.D. Ochave with Reuters